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Montana Gov. Brian Schweitzer

Montana accused online travel industry of shortchanging hotel taxes

Sep 05, 2010

HELENA – The online travel booking industry on Friday disputed an earlier allegation from Montana Gov. Brian Schweitzer that it has been shortchanging the state on hotel taxes, while the governor countered that he is confident the big companies owe Montana money.

A Washington D.C.-based trade group said it has been successful in most of its court cases in beating back collection of local and state hotel taxes, and said it works just like traditional travel agents who dominated the business before online booking became commonplace.

The group is trying to get Congress to eradicate the local taxes altogether, arguing it is not manageable for their members to track them all — a proposal local innkeepers argue is unfair since they must pay the local taxes.

Earlier in the week, Schweitzer said state revenue officers would be going after the online travel booking sites. He said millions in back taxes might be at stake.

Andrew Weinstein, spokesman for Interactive Travel Services Association, said online agents only pay hotel taxes on the amount of money going to the hotel for the transaction — and not the higher amount paid by the consumer.

"No intermediaries in the travel industry have ever been assessed hotel occupancy taxes because they are not hotels," said Weinstein, whose group represents companies like Orbitz and Travelocity. "The amount received by the hotel is the taxable amount."

Montana, like other state and local governments, is arguing that the state occupancy tax should be paid on the full amount the consumer pays for the room, similar to the way a sales tax works.

Gov. Brian Schweitzer said he thinks the Montana law is clear, and expects the fast-growing Internet companies will have to respond to state requests for information on the topic.

Schweitzer said it's clear to him the companies need to pay tax on the amount paid by the consumer. He said the Department of Revenue has begun seeking information from the big online booking sites that he accused of "hiding behind smelly lobbyists in $2,000 suits."

"If we've got a highly paid lobbyist in Washington D.C. that represents their interests, that's good, because then we are starting to hear from someone who is not paying their bed tax. Maybe we can get this all straightened out and have them send us a check," Schweitzer said.

Montana accused online travel industry of shortchanging hotel taxes
Montana Governor Brian Schweitzer

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